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BRIGHT SPOT AMID GLOOM: Mr Ng said a bright spot in the troubled financial market environment is Asia's wealth management sector. WMI chief Annie Wee, seen here in the background, added that there was a talent shortage in the sector with the fund management and private banking industries booming. -- PHOTO: LIANHE ZAOBAO
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THE global downturn stemming from the crisis in the financial system will be more prolonged than the slump triggered by the tech bubble bursting some eight years ago.
That was the message delivered yesterday by a senior executive from the Government of Singapore Investment Corporation (GIC).
Group chief investment officer Ng Kok Song told 80 top private bankers, senior fund managers and other executives in Singapore yesterday that policymakers also face more uncertainties, including inflation and the United States presidential race.
But a bright spot in this 'troubled financial market environment' is Asia's wealth management sector.
It will 'still go against the current...cost-cutting' by some global financial institutions, said Mr Ng, adding that he was still very positive about its growth prospects.
Mr Ng, who was speaking at a lunch to mark the fifth anniversary of the Wealth Management Institute (WMI), said later that the 'adverse scenario we face now was triggered by the financial excesses over the past seven years'.
Financial institutions in the US and Europe are now in the process of 'de-leveraging', cutting their exposure to risky loans and scaling down their assets and loans, he noted.
'But as they (banks) make fewer loans than before, this creates a multiplier effect on the economy...A slowdown induced by the financial institutions will take a longer time to recover than the previous one,' said Mr Ng.
He noted that the situation is 'more challenging than before', referring to the 'technology, telecoms and media bubble' that burst in 2000.
Mr Ng added that policymakers face a more complicated task in responding to this crisis.
'Central banks (like) the Federal Reserve previously had a lot of latitude to pursue easy monetary policy, such as lowering interest rates. But now, they are constrained because of the high price of oil...and food,' he said.
This, coupled with the political uncertainty from the US elections, which take place in four months, mean that 'it will take longer for us to recover', he added.
He did not state how long the recovery process may take. But market observers reckon that the economy may take longer than the couple of years it took to shrug off the effects of the tech slump.
But while the global financial industry is now consolidating, with some banks merging and others cost-cutting and laying off staff, Asia's wealth management industry is still on a roll, said Mr Ng.
He noted that banks are reluctant to cut costs for their Asian operations as they want to concentrate on expanding in Singapore.
Mr Ng, who is also the chairman of the WMI, added that a certificate from the institute is a 'passport' to snaring a job in the wealth management sector.
The idea for the institute was conceived over a lunch Mr Ng had in 2003 with Temasek chief executive Ho Ching, who hosted yesterday's event.
Their aim was to help address the talent shortage in Singapore's wealth management sector. So far, the WMI has produced more than 1,600 graduates.
Yet, despite that contribution, there is still a talent shortage with the fund management and private banking sectors booming, said WMI chief executive Annie Wee.
Mr Ng said GIC and Temasek, too, 'will continue to face the challenge of having sufficiently experienced staff to deal with the challenges', as they are a hunting ground for talent scouts seeking experienced fund managers.
graceng@sph.com.sg
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